No Zoom from Five to Nine, Inflation Eats into Oil and Why Customer Remains King.
Hey, Hisa fan,
It has been another mixed week, from the oil crisis in Europe and the inflation data in Kenya, the week has sure been a stressful one for us. But as we always say at Hisa, with every challenge, comes a greater opportunity, well, apart from inflation.
Let’s start with good news.
Zoomtopia
If it's work, you definitely don’t want to have zoom meetings after 5 PM till the next morning at 9 AM. Sure looks like this is the new trend.
Zoom Telecomunications Inc, the U.S communications technology company known for videotelephony and online chat services through a cloud-based peer-to-peer software platform and is used for teleconferencing, telecommuting, distance education, and social relations was battered during the week as the company’s hope of acquiring call center software firm Five9 flopped on Thursday.
Zoom had hoped to acquire Five9 in a bid to expand the company’s post-pandemic business plans in a $14.7 billion all-stock purchase. This would have been Zoom’s largest acquisition.
Five9 shareholders displayed their dissatisfaction with the “small” premium that Zoom was set to pay, they also said that Zoom’s share price had shown quite some volatility, a risk they were not willing to take.
Despite the moves, both Zoom and Five9 shares jumped during Friday’s trading on the Nasdaq after the two companies officially agreed to terminate the planned merger agreement. Zoom shares were up 2.30% to 267.51$ per share while Five9 shares traded even higher, with the company closing Friday at $167.26 per share, a 4.71% gain from Thursday’s close.
Oiling the Price.
The world’s most traded commodity is becoming not so common! Guess what, Oil prices have been rising globally. In fact, there is a huge oil crisis that has already begun in Europe, but the European issue is more of demand triggered, backed by employment concerns brought over by Brexit.
On Tuesday, oil prices rallied their highest in three years, with the benchmark Brent crude hitting $80 per barrel.
The oil crisis is backed by the resumption of demand in the global oil market while production remains tight. In fact, an analysts report from Goldman Sachs said crude oil prices could hit as high as $90 per barrel by the end of 2021.
Oil is an important commodity for industries worldwide and the decline in oil prices would mean another crisis for major industries globally on an already thin topline.
On the good side, The Organization of the Petroleum Exporting Countries (OPEC+) and allies led by Russia, are set to meet today in a bid to review output policy. However, little seems to be on the menu since the earliest we can see production rise is in November with an expected minimal move of 800,000 bpd introduced to the market.
Also, U.K PM had announced that starting Monday, the country’s military drivers will be tasked to deliver oil across the country.
Is this important?
Manners maketh man, so does fuel runneth economies. Make of it what you must, just be sure to buy the commodities and ETFs of some of these commodities via the Hisa App.
But seriously, yes! This matters, with liquidity crunch on the oil market, the already higher oil prices across the globe including Kenya will definitely skyrocket.
Inflation
Yes, you are right! We couldn’t miss this one out! Inflation, the rising cost of living is not only there, but it’s also here too!
Last week on Monday, during a meeting with fellow central bankers, organized by the European Central Bank (ECB), the Chairman for the U.S Federal Reserve Jerome Powell admitted that Inflation was a worrying concern. But it’s not only in the U.S, here is how various markets are having their piece of the cake:
U.K Inflation Rate - 3.2% (Fastest growth since 2016)
U.S Inflation Rate - 4.3% (Highest since 1991).
Euro Zone Inflation Rate - 3.4% (Highest in 13 years)
On the local space, Kenya wasn’t left out either. Kenya’s inflation figures soared to 6.91% a record 19 month high, backed by rising costs of fuel which impacts sectors across board.
That’s right, the official data showing that Kenya’s CPI rose by 0.32 cents from an index of 115.710 in August 2021 to 116.077 in September 2021.
Just like deflating a balloon is easier than inflating it, so it is in finance. It’s about to get tougher, better buckle.
Coffee Break…Customer Is King
You are part of the Hisa community and so, here’s a reminder that we appreciate your loyalty and support in taking this journey towards financial freedom with Hisa.
Your satisfaction is our gratification and we, therefore, remain committed to helping you seamlessly invest globally, locally.
So, this one's for you: the builder, the innovator, the go-getter and all worthy achievers everywhere - Thank you for affording us the power to serve you. Thank you for choosing Hisa.
Keep an eye on all our social media platforms for a chance to win amazing prizes throughout the week.
On Markets.
Stock markets across the globe had one of the roughest weeks to end the month of September. At the start of the week, global shares suffered their worst rout since January with major U.S. and European indices feeling the heat.
At the close of Friday though, the first day of October, there seemed to have been some hope. The MSCI’s gauge of stocks across the globe gained 0.45%, this despite the weekly losses posted by U.S Stock market benchmark indices.
Local - On the local front, the benchmark all share index of the Nairobi Securities Exchange and the NSE25 posted gains while the NSE20 share index posted a weekly loss.
NASI increased by 1.92% to close the week at 181.23, the NSE 25 Index posted a 0.86% gain to close the week at 3,952.17 while the NSE20 share index was 0.08% lower, ending the week at 2,038.08 points.
Overall activity on the NSE remained subdued with the turnover posting a 49.5% decline to Kes.1.63 billion from the Kes.3.22 billion the bourse posted a week earlier.
What cowries are we collecting this week?
U.S Treasury Yields - The U.S Government bond yields have been on the rise for the past few weeks and as inflation figures globally rise, it will be a watch to see how J.P and his team at the Fed will handle this. Remember, bond yields have a correlation coefficient with stock yields.
Merck & Co., Inc [NYSE: MRK] - A covid-19 vaccine pill? Yes, Merck & Co. on Friday said they successfully completed a trial of the Covid-19 vaccine pill. This means Merck becomes the latest pharma to join the covid-19 earnings boost if their pill gets FDA’s approval.
Alibaba Group Holdings Limited [NYSE: BABA] -Alibaba is not having any forty days. The stock dropped 2.7% on Friday after Raymond James cut the company’s rating from its earlier strong bullish stance on the e-commerce segment. R.J cut BABA’s price target from $300 per share to $240. The week will be to watch how Alibaba’s shares will perform in China at Monday’s opening.
Airline Stocks - This is huge, we will be watching the listed airline stocks across various markets globally, from American Airlines [NASDAQ: AAL], Southwest Airlines Co [NYSE: LUV], United Airlines Holdings [NASDAQ: UAL] and many more. Why? - Well, at the close of Friday an analysts rating emerged on the airline industry and the recommendations on AAL, UAL & LUV were just on the up-top.
Tesla Inc [NASDAQ: TSLA] - So oil is so old, but what’s up with EV’s? The uptake? With oil having a clampdown in major global economies, looks like guys will help Tesla hit another record. In Q3, Tesla had a 20% rise in deliveries with the company delivering 241,300 vehicles globally in the July to September quarter. Let’s see how Cathy Wood and Tesla investors pick up this one.
Man shall not wait for skies to reopen but thee shall buy airlines when grounded.
How about you, what stocks are you watching for the week? Let us know on the Hisa App.
Disclaimer: This report does not constitute any investment recommendations. Investors and the general public are advised to do their own research before making any investment decision.